Europe Proposition Lead, Corporates Thomson Reuters
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Making Tax Digital: Reap benefits beyond filing VAT returns

Thomson Reuters’ Steven Smith explains why businesses need to stop shying away from the inevitable and embrace the digital transformation of tax.

1st Oct 2019
Europe Proposition Lead, Corporates Thomson Reuters
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It’s been over six months since HMRC’s Making Tax Digital (MTD) for VAT went live, yet recent research by Thomson Reuters has found that 32% of tax professionals are yet to decide what their ultimate software platform and processes for reporting under MTD will be.

The build-up to MTD for VAT was understandably concerning for many organisations, but what is clear from the survey is that with the right technology, tax and finance departments can reap benefits far beyond simply filing VAT returns electronically.

Adopting a complete digital tax reporting software platform gives businesses the visibility of indirect tax across the transaction lifecycle and their wider organisation. 

Benefits beyond filing

Indeed, the research found that while many companies have only recently started filing under MTD for VAT, they already acknowledge a number of benefits to being involved in the scheme, such as streamlining tax compliance processes through automation and improved reporting.

Over half (51%) of respondents reported now having simplified or more efficient processes, with 32% saying they now have more accurate VAT returns.

The research also highlighted that perhaps one of the most valuable aspects of reporting under MTD for VAT is that already 19% of companies have found they have better visibility of their tax liabilities so early into the new scheme.

Of those companies with solutions deployed, the research found that only 20% are currently using bridging software, with 35% either using a complete MTD digital tax reporting software platform or they are in the process of transitioning to one by 2020.

Transformation of the tax regime

With tax professionals reporting more accurate VAT returns, surely more companies need to accept that MTD for VAT is just the beginning of the transformation of the UK’s tax regime.

Other taxes are likely to follow suit in the next few years. As such, now is a great opportunity for businesses to learn, plan and invest in their accounting processes and procedures. That way, their clients and partners can be confident that they are prepared for future tax initiatives that HMRC are bound to introduce over the next few years.

By adopting the right technology and software to support the business, they will also have the foresight and flexibility to restructure the indirect tax team.

Being able to forecast and adapt to new legislation with ease will enable the organisation to future proof itself and reduce its reliance on consultants and IT. Furthermore, the ability to support the business during the creation of new operations, M&A activity, or sizable capital purchases means the company can ensure it meets the right tax considerations in a timely manner. 

The digitalisation opportunity

The digitalisation of tax is an opportunity for indirect tax teams to adopt a proactive spirit and partner with the broader finance department. Together they can review what technologies other tax teams and larger finance teams are deploying as well as identify where technology is lacking.

Working together will ensure the business benefits from smarter investments in technology that allows its experienced tax teams to focus on more strategic goals rather than being bogged down with manual tasks. 

Replies (5)

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By why always me
02nd Oct 2019 10:21

We had moved a fair chunk to Quickbooks, 50% fine and it will benefit us in long run, 50% a shambles and no amount of training and support will fix. They are being moved back to spreadsheets and bridging software and are all a bit miffed we suggested they move.

Cannot beat a spreadsheet and filter option to review, no matter what techy people tell you.

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Replying to why always me:
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By nodrogbir
02nd Oct 2019 16:09

And if manual records work and have worked for the past 40 years why change.
In my career Ive seen more errors caused by computer input error un-checked than any manual records and that included HMRC>

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Replying to nodrogbir:
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By why always me
08th Oct 2019 11:56

We were initially told spreadsheets unacceptable only for HMRC to loosen this restriction.

Lesson learned, wait to last minute rather than planning ahead based on HMRC 'rules'

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Chris M
By mr. mischief
02nd Oct 2019 22:32

It's utterly daft to, for example, migrate someone aged 50 running say an £800k hotel business with excellent spreadsheet records but dubious skills beyond that on to the Cloud. Or worse still a one-person band £100k business using manual records and sending you downloaded bank statements.

No amount of snake oil selling will change this basic fact:

The most important thing by far in any system is that the user, whoever that may be, enters 95% or more of the transactions to the right place in a timely fashion. There are absolutely no short cuts once this has stopped happening, which naturally leads to higher fees, problems filing on time and people feeling very negatively towards their shiny new systems.

For the most part, my client base is carrying on as they have always done and where necessary I am just using the Excel link systems for the VAT. Over time I expect to gain clients locally compared to competitors who have frogmarched clients to Xero, QBO etc. I am already talking to 2 very attractive potential new clients where their new systems are costing them more and seem to be delivering them less in terms of information quality.

And don't get me started again on the dodgy economics of many of these businesses. Xero for example is supposedly helping clients make profits, but in 12 years in business has never paid a dividend. WTF is that?

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Replying to mr. mischief:
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By nodrogbir
03rd Oct 2019 14:53

I 100% agree. Just wait until HMRC start looking at records produced by self employed taxpayers who have used these complex solution and realise their VAT records are wrong. So long as a mix of computer and manual records get to the right answer and are checked by an Accountant what is the problem with HMRC. It seam they would prefer rubbish records that look "pretty" because they are digital.

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